GE doubles down on restructuring to combat slow growth
General Electric Co said on Friday that it would double its 2016 budget for restructuring spending to fight the effects of low oil prices and slow global growth that pummeled its earnings last year.
The U.S. conglomerate plans to spend $3.4 billion on restructuring measures this year, double the $1.7 billion it targeted just last month, Chief Financial Officer Jeff Bornstein said in an interview just hours after GE reported lower-than-expected quarterly revenue.
The company’s shares were down 1.3 percent at $28.24 in afternoon trading after falling as much as 3.1 percent earlier in the session.
Bornstein said the restructuring would affect all of GE’s diverse industrial units, “with an emphasis on oil and gas” operations, whose profit had tumbled 19 percent in the fourth quarter.
GE also plans to double cost reductions in the oil and gas business, which supplies equipment to energy prospecting and production companies. It is targeting as much $800 million in cuts in 2016, compared with an earlier goal of $400 million, Bornstein said. It cut $600 million in the business in 2015.
The restructuring measures include consolidating factory and service-center real estate, improving supplier relationships, making plants more efficient and reducing overhead and product costs.
The emphasis on restructuring comes as GE transforms itself into a digital-industrial company, making complex machines and the software to run and monitor them. It plans to move its global headquarters from Connecticut to Boston, which it said attracts a “technologically-fluent” workforce.